March 15, 2023

Keynesians keep trying to kill it all

Keynesian dopamine dopes flooded world economies over the last several years with cash through both fiscal and monetary policies that were rash and drastically ill-conceived. We may be reaching the painful payment point now for that stupidity.  Maybe not.  But there is pain that inevitably has to be felt at some point when the hangover from loose money kicks in.  This could be the start of it.  Again, not necessarily, but at some point it WILL happen. That's true if what we are seeing happening in banking right now is not the main event.

Via: Seeking Alpha*

*Link here.

Via Breitbart:

There is a clear through line from the spendthrift Biden administration policies to the current crisis. The $1.9 trillion American Rescue Plan overstimulated the economy, pushing inflation up to the fastest pace in four decades. Excess savings flooded the banking system, pumping banks like Silicon Valley Bank (SVB) full of what we now see are flight-prone supersized deposits.
...A research paper from the New York Fed recently found that increased demand accounts for two-thirds of inflation—and fiscal stimulus was responsible for half or more of the increase in demand.
The Fed accommodated the Biden administration’s reckless fiscal policy by holding interest rates near zero even after the economy had begun to recover from the pandemic and lockdowns. Massive quantitative easing held down bond yields not just for Treasuries but for mortgage-backed securities as well.

My firm belief is that they keep downplaying monetary policy impacts; they are far stronger than fiscal policy impacts by a magnitude. Regardless, both were completely wrong-headed and share the blame.  The takeaway: Keynesian economists are wrong, they have always been wrong; their economic model is wrong and they keep trying to kill the economy with their boneheaded solutions - that ARE THE PROBLEM.

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